Multifamily Refinance & Bridge Loans: Bridge, Agency (Fannie Mae, Freddie Mac, HUD) and Cash-Out Options
Refinancing an apartment building isn't one product — it's a choice between very different kinds of debt. A stabilized building with strong occupancy belongs in long-term agency financing. A building mid-renovation or still leasing up needs a bridge loan first. And an owner who's built equity may want a cash-out refinance to fund the next acquisition. Picking the wrong lane costs money, time, or both.
The Three Main Paths
- Multifamily bridge loans — short-term (typically 12–36 months), interest-only capital for value-add, lease-up, or buildings that don't yet qualify for permanent debt.
- Agency loans — long-term, often non-recourse financing backed by Fannie Mae, Freddie Mac, or HUD/FHA for stabilized properties.
- Cash-out refinance — replacing existing debt with a larger loan to pull equity, available through agency, bank, debt fund, or bridge programs depending on the property.
Multifamily Bridge Loans
Bridge debt is built for the gap between where a building is and where it's going. Common uses include buying a property with below-market rents, renovating units, curing deferred maintenance, or refinancing out of a maturing loan before the property is stabilized.
- Leverage: often up to 75–80% of cost, with renovation (capex) holdbacks, typically capped around 70% of stabilized value
- Term: 12–36 months, usually interest-only, with extension options on many programs
- Underwriting: the business plan, the sponsor's experience, and a realistic exit — usually an agency or bank refinance at stabilization
- Recourse: non-recourse is available on some stabilized or near-stabilized deals
Bridge rates are higher than permanent debt. That's the cost of flexibility — and why the exit plan matters as much as the entry.
Agency Multifamily Loans: Fannie Mae, Freddie Mac and HUD
Agency loans are the backbone of stabilized apartment financing. They generally offer the longest terms, fixed rates, and non-recourse structures — in exchange for more documentation and stricter property standards.
Fannie Mae Multifamily
Fannie Mae lends through approved lenders on stabilized 5+ unit properties. Typical structures include 5–30 year terms, amortization up to 30 years, partial or full-term interest-only on qualifying deals, and leverage commonly in the 65–80% range depending on coverage and property. Small-loan programs serve smaller buildings.
Freddie Mac Multifamily
Freddie Mac's conventional and Small Balance Loan (SBL) programs are similar in purpose. SBL targets smaller loans on 5+ unit properties with a streamlined process, fixed and hybrid-ARM options, and terms commonly 5–20 years.
HUD / FHA Multifamily
HUD programs — such as 223(f) for acquisition and refinance, and 221(d)(4) for new construction or substantial rehab — offer some of the longest fixed-rate, fully amortizing terms available, up to 35 years on 223(f) and 40 years on 221(d)(4). The trade-off is a longer, more document-heavy process, so they're best for owners who can plan ahead.
What Agency Lenders Look For
- Stabilized occupancy — commonly around 90% for several months
- DSCR typically 1.20–1.25 or better
- Sponsor net worth and liquidity relative to the loan, and multifamily ownership experience
- A current rent roll, trailing 12-month operating statement, appraisal, and third-party property and environmental reports
Multifamily Cash-Out Refinance
If your building's income and value have grown, a cash-out refinance can turn that equity into capital for another acquisition, renovations, or partner buyouts. Lenders size the new loan on both value (LTV) and income (DSCR) — whichever is more restrictive wins. On stabilized buildings, agency cash-out is often the lowest-cost option; on buildings mid-plan, a bridge loan can pull equity sooner at a higher rate.
How to Choose
- Stabilized, strong occupancy, long hold: agency permanent debt (Fannie Mae, Freddie Mac, or HUD)
- Value-add, lease-up, or below-market rents: bridge first, then refinance to agency
- Equity to redeploy: cash-out refinance sized on current income
- Maturing loan on a building that isn't ready: a bridge refinance buys time to stabilize
Terms, rates, and leverage vary by property, market, and sponsor, and every loan is subject to underwriting and approval.
Documents to Have Ready
- Current rent roll and trailing 12-month operating statement
- Current mortgage statement and loan maturity date
- Capital improvement history and budget (for value-add)
- Sponsor resume, personal financial statement, and entity documents
Related reading: Commercial Multifamily Loans Guide · Portfolio Loans for 5+ Rentals · DSCR Loan Requirements. See all programs on our multifamily & portfolio loans page.
California Business Capital | Fresno, California | info@cabizfunding.com | 559-549-4717